Saturday, August 19, 2006

Dodging the gorilla

Zoho is a company I have a lot of respect for. They are doing some really creative work delivering applications that people can really use. The recent folding of Kiko's calendar service and its sale on ebay has raised the spectre of innovative web entrepreneurs being pulverized by the established giants such as Microsoft and Google. Jason Fried of 37 Signals, the company behind applications such as the excellent Basecamp disputes this conclusion in his recent blog and Sridhar Vembu of Zoho also supports that view in his blog, What is Success. I agree with Jason and Sridhar. I recently completed an analysis of Microsoft's Windows and Office Live services. You can find the post at Dion Hinchcliffe's Web 2.0 blog, Windows - Live and Kicking. I think there is some misunderstanding about Microsoft's intentions with Office Live, at least in the short term. When Microsoft announced Office Live, less than a year ago, everyone jumped to the conclusion that the Office Suite was going to be available as a suite of web-based applications. The Office Live that is currently in beta is a very different beast. It is targetted as a set of tools to get smaller companies on line. A service that is competing more with the likes of Network Solutions, and GoDaddy than 37 Signals or Zoho. I believe it will be some time before Microsoft moves Office on line. The risk of cannibalizing revenue from Office Suite sales is too great. Instead I expect to see newer versions of Office provide hooks in to Windows and Office Live. We will see business and team collaboration applications delivered under the Office Live brand and expect those web-based applications to have some requirements to use components from the Office Suite. Indeed I expect to see functionality appear in Office Live that can only be fully utilized with the latest version of Office. This will serve Microsoft's interests in driving additional upgrade revenues and force people to upgrade that might otherwise have been quite content with the basic word processing, spreadsheet and presentation functionality available in older versions of Office. So Zoho and 37 Signals keep up the great work. Keep innovating and use your agility to stay ahead of those 800 pound gorillas!


  1. Thanks Mark! We will keep moving at Zoho.


  2. Hi Mark, I agree with your analysis and would also like to add that while there are many supporters of Microsoft products and technologies, there are many, many more who understand that Microsoft is no longer an innovator in the software market but rather an aquirer or replicator of other companies innovative and successful products. It's these people who keep the smaller ISV's in business and inspire us to think-up and roll-out cost-effective solutions for their real-life needs/problems. I'm not worried about Microsoft taking over the hosted project-management space by bringing out a better solution than what we have because quite frankly I doubt they could ;-)
    - Alan Barlow, Co-founder & CTO, ProActive Software.